Lies, Damn lies and statistics!
Monday, 10 March 2008
This headline is an advertisement from Threadneedle in one of the national newspapers on Saturday 8th March.
I have no wish to challenge their claim, but I am interested in how they have beaten the market?
If I know how, then I could have faith in investing money in their funds. I want to know what were the decisions that the fund managers made which led to outperformance? It is no use to me or investors for these fund managers to claim they have outperformed as that is history, and quite frankly 5 years is only a short term time frame…I want to be reassured that what they are doing is repeatable.
The key issue is find out is 'how they captured alpha?'…(alpha is an investment term which is described as the part of the return that has not been generated by the market itself). If you as an investor cannot really be clear about how the fund manager has captured investment returns through skilful purchases and sales..ie alpha, how can you confidently invest for the future?
If you cannot understand how they have outperformed, how do you know they have outperformed?....just because they tell you they have! Remember investment companies are very good at marketing.
As an investor you need to carry out your own due diligence to find out whether the claims have substance or they are very good at marketing!
posted by Murray Round Wealth Management @ 13:45,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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